Two employees signed employment agreements that contained noncompete provisions and arbitration provisions. The employees later quit and began working for a competitor. The employer tried to arbitrate the case and the employees sought a declaratory judgment in state court that the noncompetition provisions were unenforceable under state law. The Oklahoma Supreme Court ruled that it had adequate and independent state law grounds to consider the enforceability of the agreements, notwithstanding the arbitration provisions. It then held that the agreements were unenforceable under Oklahoma law.

The United States Supreme Court vacated the Oklahoma Supreme Court’s decision. The Court explained that when a contract is subject to the Federal Arbitration Act, a trial court has jurisdiction to consider only the validity of the arbitration provision; the arbitrator has jurisdiction to consider all other attacks on the validity of the contract. Because the Oklahoma court overstepped its boundaries in determining that the noncompetition provisions violated state law, the Court vacated the decision and remanded the case.

To speak to a Texas noncompete lawyer, contact the Dallas employment lawyers at Clouse Dunn LLP. You may send an email to debra@www.cdklawyers.com or call (214) 239-2705.